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Statement of Cash Flows (Indirect method) Particulars |Amount in £000 Amount in £000 Cash Flow from operating activities: Net loss -14 Adjustments: Loss on sale of assets Depreciation Amortization Exceptional write down 24 88 14 20 22 Decrease in accounts receivable -32 8 Increase in Inventories Decrease in Prepaid expenses Increase in Accounts payable 136 Increase in Accrued Interest Decrease in Taxation -160 124 Cash flow from Operating Activities 110 Cash Flow from Investing Activites: 10 -164 -40 Proceeds from sale of assets Cash paid for purchase of assets Cash Paid for purchase of Patent Net Cash flow from Investing activities -194 Cash Flow from Financing Activities: Loans Common stock issued Net cash flow from Financing activities 36 140 176 Net change in cash Beginning cash balance Ending cash balance 92 214 306 4.

Statement of Cash Flows (Indirect method) Particulars |Amount in £000 Amount in £000 Cash Flow from operating activities: Net loss -14 Adjustments: Loss on sale of assets Depreciation Amortization Exceptional write down 24 88 14 20 22 Decrease in accounts receivable -32 8 Increase in Inventories Decrease in Prepaid expenses Increase in Accounts payable 136 Increase in Accrued Interest Decrease in Taxation -160 124 Cash flow from Operating Activities 110 Cash Flow from Investing Activites: 10 -164 -40 Proceeds from sale of assets Cash paid for purchase of assets Cash Paid for purchase of Patent Net Cash flow from Investing activities -194 Cash Flow from Financing Activities: Loans Common stock issued Net cash flow from Financing activities 36 140 176 Net change in cash Beginning cash balance Ending cash balance 92 214 306 4.

Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter11: The Statement Of Cash Flows
Section: Chapter Questions
Problem 27BE
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Dolente Ltd is a small company which designs, manufactures and sells innovative electronic instruments. The directors of the company have discussed the financial statements prepared for the year ended 31st March 2020 and have made the following remarks.
“We are surprised to see that we have a loss for the year as our bank balance seems to be healthy and has increased from the 2019 figure”.

Required:

(b) Using the information provided by the cash flow statement, comment on the remarks of the directors on the results for the year (120-170 words at least).

Statement of Cash Flows (Indirect method) Particulars Amount in £000 Amount in £000 Cash Flow from operating activities: Net loss Adjustments: Loss on sale of assets Depreciation Amortization Exceptional write down Decrease in accounts receivable Increase in Inventories Decrease in Prepaid expenses Increase in Accounts payable Increase in Accrued Interest Decrease in Taxation -14 24 88 14 20 22 -32 8 136 4 -160 124 Cash flow from Operating Activities Cash Flow from Investing Activites: Proceeds from sale of assets Cash paid for purchase of assets Cash Paid for purchase of Patent Net Cash flow from Investing activities Cash Flow from Financing Activities: 110 10 -164 -40 -194 Loans 36 Common stock issued Net cash flow from Financing activities Net change in cash Beginning cash balance Ending cash balance 140 176 92 214 306 Working Note: Loss on sale of assets Cost 60 Less: accu. Depreciation 26 Book Value 34 Sale proceed 10 Loss on sale of assets (34-10) 24
Transcribed Image Text:Statement of Cash Flows (Indirect method) Particulars Amount in £000 Amount in £000 Cash Flow from operating activities: Net loss Adjustments: Loss on sale of assets Depreciation Amortization Exceptional write down Decrease in accounts receivable Increase in Inventories Decrease in Prepaid expenses Increase in Accounts payable Increase in Accrued Interest Decrease in Taxation -14 24 88 14 20 22 -32 8 136 4 -160 124 Cash flow from Operating Activities Cash Flow from Investing Activites: Proceeds from sale of assets Cash paid for purchase of assets Cash Paid for purchase of Patent Net Cash flow from Investing activities Cash Flow from Financing Activities: 110 10 -164 -40 -194 Loans 36 Common stock issued Net cash flow from Financing activities Net change in cash Beginning cash balance Ending cash balance 140 176 92 214 306 Working Note: Loss on sale of assets Cost 60 Less: accu. Depreciation 26 Book Value 34 Sale proceed 10 Loss on sale of assets (34-10) 24
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